U.S. home sales regain footing, surge 18.6%

WASHINGTON, June 24 (UPI) -- U.S. new home sales exceeded expectations in May, surging by 18.6 percent, the strongest pace in six years, according to the Census Bureau.

The Census Bureau said Tuesday that new home sales reached a seasonally adjusted annual rate of 504,000, up 18.6 percent from April's rate. This is the fastest growth seen since May 2008, just before the recession hit the U.S. market.

Economists polled by MarketWatch had estimated a 440,000 increase, largely led by a surge in the Northeast. Tuesday's numbers far exceeded estimates made by market observers and economists.

Sales were impressive in the West registering a 34 percent rise, whereas sales rose by only 1.4 percent in the Midwest, contrary to economists expectations that the market would rebound after a lull during the winter months. The median price for homes increased 4.6 percent to $282,000 last month and the supply of new homes dropped to 4.5 months from 5.3 months in April.

Despite the encouraging figures, home affordability continues to be difficult for first-time buyers, with prices rising consistently and buyers struggling to get financing. The share of first-time home buyers dropped to 27 percent in May, down 2 percent from April.